NEWS

Undisclosed Deal Brings Passengers Back to Amtrak’s Gulf Coast

01 Dec 2022, Posted in All Posts, Blog Posts
Amtrak service

For years, Amtrak has been seeking to restore passenger service to a section of track along the Gulf Coast between New Orleans, LA and Mobile, AL. The matter has been controversial for a few reasons and worked its way all the way to the Surface Transportation Board (STB). In the relative quiet of the Thanksgiving week, a deal was finally announced that the passenger carrier will put this route into service – a decision made in private between Amtrak and the freight railroads that own the track, and settled before the STB voted to force the issue.

The question of passenger service on this route became an issue when previous passenger service was suspended after Hurricane Katrina that devastated the region’s infrastructure. The freight railroads made the necessary investments and improvements and put their trains back into service within the year, but Amtrak chose not to. Even before the hurricane, ridership was low and the route was not economically viable without subsidy and support – which is common for passenger services.

Over the years, Amtrak began to express interest in resuming service, but freight carriers asserted that additional investment would be needed and studies undertaken. Disagreement over the level of maintenance and funds required stalled talks until a study eventually began, but not all participants remained in the study through its conclusion. Interjection by Congress and the executive branch further elevated this section of track to the spotlight, and eventually Amtrak appealed to the STB using funds appropriated by Congress for essentially any matters Amtrak deemed necessary.

With the agreement now penned to return service, we no longer have to wait for the STB judgement, which was almost certain to decide in Amtrak’s favor. It is possible that freight carriers settled in private to avoid terms unfavorable to them set by the STB, but without details on the agreement this is mere speculation. It is equally likely that the terms would be the same, but continued legal and administrative costs of prolonging the issue were best cut short.

The upshot is that passenger service will be activated on this Gulf Coast route, although the date of service is unknown. Also unknown is the level of investment Amtrak has agreed to for maintenance needs the freight carriers asserted would be needed before passenger service begins. According to STB Chair Margin Oberman, and reported by POLITICO, passenger service will go into effect faster because of this private settlement than if the STB had voted itself to resolve the matter.

While many things remain unknown, one that can be known for relative certain is that this route in particular will rely on heavy public subsidy. According to its own projections, Amtrak expects the Gulf Coast route to lose money and by 2027, only have as few as 200 daily riders. Many Amtrak services are supported by public funds, but few if any are as disproportionate in expected ridership revenue and operational cost. With that said, there are anticipated benefits from the service, and if freight carriers reached an agreement with the passenger carrier, we can expect to know more as the deal progresses and Amtrak reveals new ridership projections and service dates.

 

Written by Benjamin Dierker, Director of Public Policy

 

The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.